<PAGE>
46 Public Square, P.O. Box 3000, Wilkes-Barre,
Pennsylvania 18703 - (717) 825-1100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1994
The Annual Meeting of Shareholders of C-TEC Corporation (the
"Company") will be held at the Westmoreland Club, 59 South
Franklin Street, Wilkes-Barre, Pennsylvania, on Thursday, April
21, 1994 at 10:00 A.M., local time. The meeting will be held
for the following purposes:
1. To elect four (4) Directors to Class I to serve for a term
of three (3) years.
2. To ratify the selection of Coopers & Lybrand as
independent auditors for the fiscal year ending December 31,
1994.
3. To approve the Company's 1994 Stock Option Plan.
4. To act upon such other matters as may properly come before
the meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on March
1, 1994 will be entitled to vote at the meeting either in person
or by proxy. Each of these shareholders is cordially invited to
be present and vote at the meeting in person.
In order to insure that your shares are represented and are
voted in accordance with your wishes, IT WILL BE APPRECIATED IF
YOU WILL DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE. If you attend the meeting, you
may personally vote your shares regardless of whether you have
signed a proxy.
\s\ Raymond B. Ostroski
RAYMOND B. OSTROSKI,
Vice President, General Counsel and Corporate
Secretary
Dated: March 15, 1994<PAGE>
<PAGE>
C-TEC CORPORATION
PROXY STATEMENT
This Proxy Statement is being mailed to shareholders on or
about March 15, 1994 in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders (the "Meeting") to be held on
Thursday, April 21, 1994 at 10:00 A.M., local time, at the
Westmoreland Club, 59 South Franklin Street, Wilkes-Barre,
Pennsylvania, and at any adjournment or postponement thereof.
All shares represented by valid proxies received in time for the
Meeting, and not revoked, will be voted. Unless the shareholder
otherwise specifies therein, such shares will be voted by the
persons named as proxy holders in favor of Proposals 1, 2 and 3.
As to any other business which may properly come before the
Meeting and be submitted to a vote of shareholders, proxies will
be voted in the best judgment of the designated proxy holders.
The form of proxy enclosed is for use by a shareholder if the
shareholder is unable to attend or does not desire to vote in
person. Any shareholder giving a proxy has the right to revoke
it at any time before the proxy is exercised, by executing
another proxy and delivering it to the Secretary of the Company
or by voting in person at the Meeting.
The close of business on March 1, 1994 has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the Meeting and at any adjournment or
postponement thereof. On March 1, 1994, there were outstanding
7,962,266 shares of Common Stock and 8,547,327 shares of Class B
Common Stock of the Company. Shareholders will be entitled to
one
vote per share for Common Stock and fifteen votes per share for
Class B Common Stock on all matters to be submitted at the
meeting and are entitled to cumulative voting rights with
respect to the election of Directors. Under cumulative voting,
a shareholder's total vote (the number of shares held multiplied
by the number of Directors to be elected) may be cast entirely
for one candidate or distributed among two or more candidates.
The persons named in the accompanying proxy may, at their
discretion, cumulate the votes which they are authorized to
cast. If a shareholder is a participant in the C-TEC
Corporation Common-Wealth Builder Plan, the proxy card will
indicate the number of shares held beneficially by the
participant in the plan and the proxy card will serve as a
voting instruction for the trustee of the plan.
The affirmative vote of a majority of the total shares
represented in person or by proxy and entitled to vote at the
Meeting is required for approval of Proposals 1,2, and 3 or any
other matter as may properly come before the meeting or any
adjournment or postponement thereof.
In accordance with Pennsylvania law, a shareholder entitled to
vote for the election of directors can withhold authority to
vote for all nominees for directors or can withhold authority to
vote for certain nominees for directors. Abstentions from the
proposals to approve the ratification of the selection of
auditors and 1994 Stock Plan are treated as votes against the
particular proposal. Broker non-votes on the Proposals are
treated as shares as to which voting power has been witheld by
the beneficial holders of those shares and, therefore, as shares
not entitled to vote on the proposal.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes
and is currently comprised of 11 members. One class is elected
each year for a three-year term. Class I Directors whose term
will expire at the Meeting contains the following nominees, all
of whom are presently Directors of the Company: David C.
McCourt, David C. Mitchell, Donald G. Reinhard and Walter Scott,
Jr. These four (4) nominees, if elected at the 1994 Annual
Meeting, will serve for a term of three (3) years expiring at
the Annual Meeting of Shareholders to be held in 1997.
It is not anticipated that any of these nominees will become
unavailable for any reason, but, if that should occur before the
Meeting, the persons named on the enclosed Proxy reserve the
right to substitute another of their choice as nominee in his
place or to vote for such lesser number of Directors as may be
prescribed by the Board of Directors.
The Board of Directors recommends that the shareholders vote
FOR the election of four Directors to Class I for a term of
three years.
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the shareholders to ratify the selection
of Coopers & Lybrand as the Company's independent auditors for
the year ending December 31, 1994.
If the shareholders do not ratify this appointment, other
independent auditors will be considered by the Board of Directors
Representatives of Coopers & Lybrand are expected to be present
at the Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to
appropriate questions.
The Board of Directors recommends that the shareholders vote
FOR the ratification of the selection of Coopers & Lybrand to
serve as the Company's independent auditors for the year ending
December 31, 1994.
PROPOSAL 3
1994 STOCK OPTION PLAN
Introduction. The Board of Directors believes that the future
success of the Company is dependent upon the quality of the
Company's management and its employees and that compensation
programs, in particular a long-term incentive program such as
the Company's stock option plan, are of vital importance in
attracting and retaining individuals of superior ability and in
motivating their effort on behalf of the Company and its
shareholders. The Board also believes that offering
equity-based incentive awards strengthens the mutuality
<PAGE>
of interest between shareholders and employees. To use stock
options for these purposes, the Board of Directors has
unanimously adopted, and recommends that the shareholders
approve, the Company's 1994 Stock Option Plan (the "Plan"). The
following is a brief summary of the provisions of the Plan.
Such summary is qualified in its entirety by reference to the
text of the Plan, a copy of which is attached as Exhibit "A" to
this Proxy Statement.
General Terms of Options. The Plan authorizes the grant of
stock options exercisable for shares of Common Stock, par value
$1.00 per share (the "Common Stock"), including incentive stock
options ("ISO's") qualifying for favorable tax treatment to
participants under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and Non-qualified Stock Options
that do not qualify for such favorable tax treatment ("NQSO's").
Options are non-transferable, except by will or the laws of
descent and distribution.
Shares Available Under the Plan. The maximum number of shares
of Common Stock available for issuance under the Plan is
1,350,000, subject to adjustment under certain circumstances.
Shares of Common Stock issuable under the Plan may be either
authorized and unissued shares or issued shares acquired by the
Company on the open market or otherwise. Shares subject to
ISO's that expire without being exercised shall be available for
regrant (to the extent such options were not exercised) while
NQSO's that expire without being exercised shall not be
available for regrant as NQSO's. The maximum number of shares
of Common Stock subject to NQSO's that may be granted to any
employee during any ten-year period shall not exceed 1,350,000
shares.
Participation. All employees of the Company (other than those
employed pursuant to a collective bargaining agreement),
including employees who are Directors or Executive Officers,
will be eligible to receive options under the Plan. (The term
"Company", as used herein and in the Plan, includes the
Company's parent and subsidiary entities, as such terms are
defined in the Code). Subject to shareholder approval of the
Plan, ISO's to acquire an aggregate of 375,000 shares of Common
Stock at an exercise price of $29.75 per share were granted to
nine (9) executive officers of the Company in March 1994.
Administration. The Plan will be administered by the Board of
Directors, the Compensation Committee or such other committee
consisting of two or more directors designated by the Board,
provided that each member of the Board or the Committee is a
"disinterested person" as such term is used in Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the
"Act"). The Board or the Committee has the authority, within
the specific terms of the Plan, to select those employees to
whom options will be granted, the term of each option, the
number of shares to be subject to each option, the exercise
price of such options, designate options as Incentive Stock
Options or Non-qualified stock options and make such other
determinations as may be necessary or appropriate to administer
and interpret the Plan.
Exercise Price. The exercise price per share of an option
granted under the Plan must be not less than the fair market
value of a share of Common Stock at the time of grant (one
hundred and ten percent (110%) of fair market value with respect
to an ISO if the optionee owns or is deemed to own stock
<PAGE>
possessing more that ten percent (10%) of the combined voting
power of all classes of stock of the Company). The exercise
price may be paid either in cash or through the delivery of
shares of Common Stock previously acquired by the optionee. On
March 9, 1994, the closing price of the Company's Common Stock
as reported by NASDAQ was $29.25 per share. However, the March
9, 1994 per share closing price is not to be construed as the
Exercise Price under the Plan.
Option Term. The term of each option shall be specified by the
Committee but may not be more that ten (10) years from the date
of grant. In the case of an ISO, the term may not be more than
five (5) years if the optionee owns or is deemed to own stock
possessing more than ten percent (10%) of the combined voting
power of all classes of stock of the Company.
Exercisability. Options will generally become exercisable in
cumulative annual increments of twenty percent (20%) commencing
one (1) year from the date of grant except as otherwise provided
by the Committee and evidenced in the option instrument or in
the event of a "Change in Control" as such term is defined
below, in which case all of such options shall become
exercisable immediately. In the event of termination of a
participant's employment by the Company, the unexercised portion
of any option shall expire three (3) months after termination
(or one (1) year after his or her death or disability), unless
the expiration date of the option occurs sooner. During such
period, the participant (or his or her estate) will have the
same right to exercise the unexercised portion of the option as
the participant would have had if he or she were still an
employee of the Company.
Alternative Settlement Method. Under the alternative
settlement method, an option holder may request that he or she
be permitted to receive from the Company, in lieu of exercise of
the option, cash in an amount equal to, or Common Stock valued
at the difference between, (a) the fair market value, on the
date of the request, of the shares of Common Stock covered by
such option and (b) the option exercise price. The alternative
settlement method is available only if the Committee consents
and only to the extent that an option is exercisable. To the
extent that an option holder's request for payment under the
alternative settlement method is granted, the option ceases to
be exercisable and the shares underlying such option are not
available for issuance of new option grants.
Amendment and Termination. The Board of Directors may amend,
rescind or terminate the Plan at any time; provided, however,
that no change that would impair the rights of optionees may be
made in outstanding options without the consent of the affected
optionees. In addition, shareholder approval will be required
for amendments to the extent required to ensure compliance with
Rule 16b-3 under the Act. Unless earlier terminated by the
Board of Directors, the Plan will terminate on February 21, 2004.
Adjustments. If the outstanding shares of the Common Stock are
changed by reason of stock dividends, recapitalizations,
mergers, consolidations, split-ups, combinations or exchanges of
shares or other extraordinary event, the number, class and price
of shares subject to outstanding options are to be appropriately
adjusted by the Committee.
<PAGE>
Change in Control. The Plan provides for full vesting and
acceleration of exercise dates of options in the event of a
change of control of the Company. A change of control occurs
under the Plan when thirty percent (30%) or more of the combined
voting power of the Company's securities is acquired (with
certain exclusions) by any unrelated party (as defined in the
Plan), or if there is a dissolution or reorganization of the
Company or a change in a majority of the Board of Directors
within twelve (12) months of reorganization, merger, sale of
assets, tender offer or proxy contest.
Certain Federal Income Tax Consequences. The Company, based on
the present provisions of the Code and regulations promulgated
thereunder, believes that the Federal income tax consequences of
the grant and exercise of stock options under the Plan and the
subsequent dispositions of stock acquired are as described below.
Under the Code as currently in effect, an optionee will not be
subject to Federal income tax upon the grant of an option. Upon
exercise of an NQSO, the optionee must generally recognize
ordinary income in the amount equal to the difference between
the fair market value of the option shares and the exercise
price at the date of exercise. Upon exercise of an ISO, the
optionee generally will not have to recognize income (although
the alternative minimum tax may apply). Instead, the optionee
will be subject to taxation only upon the disposition of the
shares acquired upon exercise of the ISO. If the optionee
disposes of the ISO shares more than two (2) years after the
date of grant of the ISO and more than one (1) year after
exercise, he will realize a capital gain (or loss) based on the
difference between the sale proceeds of
the shares and the exercise price of the option. Upon payment
of cash or stock in settlement of any option the optionee must
generally recognize the amount or value of such payment as
ordinary income at the date of settlement. Different tax rules
may apply to an optionee who is subject to restrictions under
Section 16(b) of the Act with respect to shares acquired
pursuant to a NQSO. The surrender of shares in payment of the
exercise price of an option or in payment of tax obligations
with respect to any award may have additional tax consequences
for an optionee.
In any transaction relating to an option in which the optionee
must recognize ordinary income, the Company may be entitled to a
tax deduction equal to the amount of such income. To the extent
that the optionee realizes a capital gain (or loss) (including
upon sale of ISO shares held for the applicable holding
periods), the Company may not be entitled to any tax deduction.
The Company has the right to deduct any sums that federal, state
or local laws require to be withheld with respect to the
exercise of any option and may, among other things, withhold or
receive shares or other property to satisfy the optionee's tax
obligations.
The Board of Directors recommends that the shareholders vote
FOR the proposal approving the Company's 1994 Stock Option Plan.
DIRECTOR INFORMATION
Information as of February 1, 1994 concerning the principal
occupation and beneficial ownership of Common Stock and Class B
Common Stock of the Company for the nominees for election as
Class I Directors and for current directors is set forth below.<PAGE>
<PAGE>
NAME OF DIRECTOR DIRECTOR SINCE AGE
JAMES Q. CROWE 1993 44
Chairman of the Board, Senior Executive Officer and Director,
MFS Communications Company, Inc. ("MFSCC"); and Director, Peter
Kiewit Sons', Inc. ("PKS"), Kiewit Diversified Group ("KDG"),
RCN Corporation ("RCN") and California Energy Company,
Inc.("CECI"). Mr. Crowe does not own any Common Stock or Class
B Common Stock of the Company.
STUART E. GRAHAM 1990 48
Chairman, President and Chief Executive Officer, Sordoni Skanska
Construction Co. Mr. Graham does not own any Common Stock or
Class B Common Stock of the Company.
FRANK M. HENRY 1980 60
President, Frank Martz Coach Company; President, White Transit
Company; President, Gold Line, Inc.; Director, First Fidelity
Bancorporation and Pennsylvania Regional Board of First
Fidelity Bank, N.A. Mr. Henry has sole voting and investment
power of 41,040 shares of Common Stock and 23,097 shares of
Class B Common Stock.<PAGE>
<PAGE>
RICHARD R. JAROS 1993 42
Executive Vice President and Director, PKS; Chairman of the
Board, CECI; and Director, MFSCC, KDG and RCN. Mr. Jaros does
not own any Common Stock or Class B Common Stock of the Company.
ROBERT E. JULIAN 1993 54
Chief Financial Officer and Director, PKS; and Director, KDG,
RCN and MFSCC. Mr. Julian does not own any Common Stock or
Class B Common Stock of the Company.
DAVID C. MCCOURT 1993 37
Chairman, Chief Executive Officer and Director of the Company
since October, 1993; President, Chief Executive Officer and
Director, RCN; President and Director, Mercom Inc.; President
and Director, Metropolitan Fiber Systems/McCourt, Inc.; and
Director, MFSCC and MFS Telecom, Inc. Mr. McCourt disclaims
beneficial ownership of ten (10) shares of Common Stock owned by
his children for which his spouse is custodian.
DAVID C. MITCHELL 1993 52
Consultant; retired Corporate Executive Vice President,
President of the Telephone Group and Director, Rochester
Telephone Corporation; Director, Finger Lakes Long-Term Health
Care, Inc.; and member of Advisory Board, Marine
Midland Bank. Mr. Mitchell does not own any Common Stock or
Class B Common Stock of the Company.
DONALD G. REINHARD 1991 66
President and Chief Executive Officer, Pencor Services, Inc.;
President and Chief Executive Officer, Blue Ridge Cable
Television, Inc. and Blue Ridge CATV, Inc.; and President and
Chief Executive Officer, Palmerton Telephone Company. Mr.
Reinhard shares voting and investment power with respect to
1,000 shares of Common Stock.
EUGENE ROTH 1989 58
Partner, Rosenn, Jenkins and Greenwald (Attorneys); and
Director, Pennsylvania Regional Board of First Fidelity Bank,
N.A. Mr. Roth has sole voting and investment power with respect
to 396 shares of Class B Common stock and shares voting and
investment power with respect to 3,600 shares of Class B Common
Stock.
WALTER SCOTT, JR. 1993 62
Chairman, President and Director, PKS; and Director, KDG, RCN,
MFS, CECI, Berkshire Hathaway Inc., Burlington Resources, Inc.,
ConAgra, Inc., FirsTier Financial, Inc., and Valmont Industries,
Inc. Mr. Scott does not own any Common Stock or Class B Common
Stock of the Company.<PAGE>
<PAGE>
THOMAS C. STORTZ 1993 42
Vice President, Secretary and General Counsel, PKS; and
Director, KDG, RCN and CCL Industries, Inc. Mr. Stortz does
not own any Common Stock or Class B Common Stock of the Company.
Frank M. Henry, Robert E. Julian, Eugene Roth, and Thomas C.
Stortz, are members of Class II with terms expiring in 1995 and
James Q. Crowe, Stuart E. Graham and Richard R. Jaros are
members of Class III with terms expiring in 1996.
SECURITY OWNERSHIP OF STOCK
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
No named executive officer (as such term is defined herein),
nominee or Director beneficially owned, as of such date, more
than one percent (1%) of either the outstanding Common Stock or
Class B Common Stock of Company. The named executive officers
who beneficially owned securities of the Company as of such date
are John C. Balan, James E. Bogdan and Paul W. Mazza who had
shared voting and investment power with respect to 531 shares of
Common Stock, 3,236 shares of Common Stock and 15,000 shares of
Class B Common Stock, owned by each of them, respectively.
Nominees, Directors and executive officers as a group (the
"Group") beneficially owned 48,949 shares, representing .61% of
the shares of Common Stock and 50,624 shares, representing .59%
of the shares of Class B Common Stock. Upon assuming conversion
the Group beneficially owned 99,573 shares of Common Stock or
1.24%. For information with respect to
the beneficial ownership of securities by RCN Corporation, see
"Security Ownership of Certain Beneficial Owners."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect
to the beneficial ownership of shares of Common Stock and Class
B Common Stock of the Company by any person or group known to
the Company to be a beneficial owner of more than five percent
of either class of shares. The "Total" columns are unlikely to
represent the sum of the related columns because most forms of
ownership require that the same shares be disclosed in two of
the columns.
Because the shares of Class B Common Stock are convertible at
the option of the holder into shares of Common Stock on a
one-for-one basis at any time and from time to time, the
"Assuming Conversion" columns in the Common Stock table reflect
the total shares of Common Stock which would be beneficially
owned upon conversion by each group, as well as the related
percentage beneficially owned by such group assuming no other
conversions. The "Percent of Class" columns represent ownership
not voting interest. Shares of Common Stock have one vote per
share and shares of Class B Common Stock have 15 votes per
share. In addition, shares of both classes can be voted
cumulatively.
<PAGE>
<TABLE>
<CAPTION>
Without Conversion
Assuming Conversion
_____________________________________________________
_____________________________ ______________________
Sole Sole Shared Shared
Percent of Percent of
Voting Investment Voting
Investment Class Class
Power Power Power Power
TOTAL Approx. TOTAL Approx.
_____________________________________________________
_____________________________ ______________________
COMMON STOCK:
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
RCN Corporation(1) 600,768 600,768 0 0 600,768
7.55% 5,694,991 43.62%
Mario J. Gabelli
Group(2) 1,566,957 1,645,957 1,000 1,000 1,646,957 20.68% 2,829,0
65 30.94%
CLASS B STOCK:
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
RCN Corporation(1) 5,094,223 5,094,223 0 0 5,094,223 59.60%
Mario J. Gabelli
Group(2) 1,107,108 1,181,608 500 500 1,182,108 13.83%
</TABLE>
<PAGE>
1. PKS is the sole stockholder of KDG, which holds 90% of the
stock
of RCN. David C. McCourt owns the remaining 10% of the
stock of
RCN. On October 29, 1993, RCN and its wholly-owned
subsidiary,
RCN Holdings, Inc., acquired the reported shares in a
negotiated transaction. The address for RCN and
Kiewit-related subsidiaries
is 1000 Kiewit Plaza, Omaha, Nebraska 68131.
2. Based on information obtained from Schedule 13Ds and
amendments
thereto for the Common Stock and the Class B Common Stock
filed
through February 22, 1994 with the Securities and Exchange
Commission (the "SEC") by Mario J. Gabelli, together with
GAMCO Investors, Inc., Gabelli Funds, Inc., Gabelli
Performance
Partnership, Gabelli International Limited, Gabelli
International
II Limited and Gabelli & Co., all of whose address is One
Corporate Center, Rye, New York 10580-1434.
COMPENSATION COMMITTEE REPORT
This Compensation Committee report documents the principal
components of the Company's executive officer compensation
programs and generally describes the basis on which 1993
compensation determinations were made with respect to the
executive officers of the Company.
The Compensation Committee is responsible for establishing,
implementing and reviewing the Company's policies and practices
with respect to, among other things, executive compensation.
The Committee makes recommendations
with respect to executive compensation matters, which are
submitted to the Board of Directors for approval. During 1993,
the Committee went through various changes in its composition.
From January 1, 1993 through April 23, 1993, the Committee was
composed of Eugene Roth, Clarence J. Fitze and Stuart E. Graham
("Committee I"). Mr. Fitze retired from the Board of Directors
and the Compensation Committee on April 22, 1993 and Charles E.
Parente was appointed to replace him. From April 22, 1993 to
October 29, 1993, the Compensation Committee comprised Mr. Roth,
Mr. Graham and Mr. Parente ("Committee II") On October 29,
1993, Mr. Parente resigned from the Board of Directors and the
Compensation Committee leaving the Compensation Committee
comprised of Mr. Roth and Mr. Graham from October 29, 1993
through December 17, 1993 ("Committee III"). On December 17,
1993, the Board approved the appointment of David C. Mitchell
and Robert C. Julian to join Mr. Graham and Mr. Roth on the
Compensation Committee ("Current Committee"). The Current
Committee is comprised entirely of non-management directors. No
member of the Current Committee is a former or current officer
or employee of the Company or any of its subsidiaries. One
member of the Current Committee is a consultant to the Company
and another member's law firm performs services from
time-to-time for the Company.
The Company's compensation strategy in 1993 was designed to:
(a) allow the Company to attract and retain talented executives,
by providing growth and compensation opportunities similar to
that of comparably sized companies in similar industries; (b)
tie compensation awards to the financial results of
<PAGE>
the Company or business units and/or individual contributions or
accomplishments; (c) reward continued revenue and operating cash
flow growth
because these factors are significant contributors to long-term
shareholder value; and (d) increase the percentage that
performance incentives constitute as part of an executive's
total compensation as the executive's responsibilities increase.
The executive compensation program in effect in 1993 consisted
principally of salary and short-term and long-term cash
incentive opportunities. The 1993 Executive Short-Term
Incentive Plan (the "Short-Term Plan"), which was adopted by the
Board in early 1993, sets forth financial and non-financial
targets to be achieved during the fiscal year. The Company's
Senior Management Long-Term Incentive Plan (the "Long-Term
Plan") commenced January 1, 1989 and terminated December 31,
1993. Awards to the executive officers pursuant to the
Long-Term Plan were determined by a formula which relates actual
operating results to predetermined objectives for the Company's
consolidated operations for the years 1989 through 1993.
The Current Committee commenced a review, which is ongoing, of
the Company's compensation strategies, policies and practices.
As part of this review, the Current Committee determined that
the linking of the long-term interest of management and
shareholders should be further emphasized in any new long-term
incentive compensation plan by offering equity based incentive
awards through the use of stock options. Accordingly, the
Current Committee recommended that the Board adopt the 1994
Stock Option Plan.
EXECUTIVE OFFICER COMPENSATION
Effective February 1, 1993, the Board of Directors, acting on
the recommendation of Committee I, increased the base salaries
paid to the executive officers by amounts ranging approximately
from less than one percent (1%) to ten percent (10%) over their
prior year's salaries. These increases were based upon, among
other things, the consideration of competitive employment data,
an assessment of the Company's and the officer's performance
during the prior year, the officer's tenure with the Company and
internal comparability considerations.
For services rendered in fiscal 1993, the executive officers
were also awarded cash bonuses for which they were eligible
pursuant to the criteria set forth in the Short-Term Plan and
the Long-Term Plan upon the recommendation of Committee II.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Board of Directors, upon the recommendation of Committee I,
increased Mr. Parente's base salary at the beginning of fiscal
1993. This action was taken in recognition of the positive
assessment of Mr. Parente's performance and contributions as
President and Chief Executive Officer which included, among
other things, a substantial increase in the Company's operating
income and operating cash flow for the fiscal year
<PAGE>
ended December 31, 1992 over the prior year's results. Mr.
Parente was awarded the maximum cash bonuses for which he was
eligible pursuant to the criteria established in the Short-Term
Plan and the Long-Term Plan. Mr. Parente left the employment of
the Company in December 1993 and at such time a payment of
$1.875 million was paid to him in accordance with a negotiated
agreement executed between him and the Company. Upon the
resignation of Mr. Parente as Chief Executive Officer in October
1993, David C. McCourt became Chief Executive Officer. The
Board of Directors approved Mr. McCourt's annual salary of
$375,000 commencing November 1, 1993 based upon, among other
things, comparable pay levels in the industry.
COMPENSATION COMMITTEE
David C. Mitchell, Chairman
Robert E. Julian
Stuart E. Graham
Eugene Roth
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ending
December 31, 1991, 1992 and 1993, the cash compensation, as well
as certain other compensation, paid or accrued to the named
executive officers (including the Company's former chief
executive officer and two other former executive officers) by
the Company.
<PAGE>
<TABLE>
I. SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Long Term Compensation
___________________________________________________________
_________________________________
Awards
Payouts
(1)
Securities
Other
Restricted Underlying (1)(2)
Name and Annual
Stock Options/ LTIP All Other
Position Year Salary($) Bonus($) Comp($)
Awards($) SARs(#) Payouts($) Compensation($)
<S> <C> <C> <C> <C>
<C> <C> <C> <C> David C.
McCourt(3) 1993 64,904 - - - - - 28
Chairman of the 1992 N/A N/A N/A N/A N/A N/A N/A
Board and C.E.O. 1991 N/A N/A N/A N/A N/A N/A N/A
Charles E.
Parente(4) 1993 660,833 375,000 - - - 1,047,868 2,018,898
Former President 1992 587,885 342,000 - - - 1,230,434 69,084
& C.E.O. 1991 530,260 267,500 - - - 1,088,178
Andrew J. Sordoni III(5) 1993 391,909 0 - - - 748,184 94,917
Former Chairman 1992 430,385 250,000 - - - 903,380 41,699
of the Board 1991 390,565 197,000 - - - 802,098
William B. Sordoni(5) 1993 199,480 0 - - - 380,711 88,194
Former Vice 1992 218,769 127,000 - - - 459,173 38,000
Chairman 1991 198,291 100,000 - - - 407,595
John C. Balan 1993 130,538 59,588 - - - 202,768 6,207
E.V.P. - 1992 129,231 64,000 - - - 211,841 6,057
Communications Group 1991 119,665 20,000 - - - 128,166
James E. Bogdan(6) 1993 138,692 65,421 - - - 242,731 6,292
Vice President - 1992 139,788 30,000 - - - 310,926 8,897
Finance 1991 131,500 52,000 - - - 294,132
Michael J. Mahoney 1993 141,231 71,671 - - - 293,902 5,135
* E.V.P. - 1992 136,846 50,000 - - - 149,919 2,782
Cable Group 1991 97,500 8,000 - - - 0
Paul W. Mazza 1993 146,462 58,800 - - - 248,214 5,678
E.V.P. - 1992 144,231 40,000 - - - 299,427 5,555
Telephone Group 1991 128,885 47,000 - - - 262,072
</TABLE>
<PAGE>
________________________
(1) The only type of other Annual Compensation for each of the
named executive officers was in the form of perquisites and was
less than the level required for reporting. Pursuant to the
transitional provisions set forth in the proxy rules, amounts of
other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year.
(2) Includes the following amounts for the last fiscal year:
(i) David C. McCourt: $28 Company paid life insurance; (ii)
Charles E. Parente: $136,026 - Company paid split-dollar
insurance premium; $4,947 - 401(k) Company Match; $2,925 -
Company paid life insurance; $1.875 million - termination
settlement; (iii) Andrew J. Sordoni, III: $88,710 - Company
paid split-dollar insurance premium; $4,947 - 401(k) Company
match; $1,260 Company paid life insurance; (iv) William B.
Sordoni: $87,433 - Company paid split-dollar insurance premium;
$761 Company paid life insurance; (v) John C. Balan: $1,899
Company paid life insurance; $4,308 - 401(k) Company match; (vi)
James E. Bogdan: $791 - Company paid life insurance; $4,577 -
401(k) Company match; $924 - earning on long-term incentive
compensation; (vii) Michael J. Mahoney: $474 - Company paid
life insurance; $4,661 - 401(k) Company match; and (viii) Paul
W. Mazza: $845 - Company paid life insurance; $4,833 - 401(k)
Company match.
(3) Consists of two months of base salary for Mr. McCourt, who
was elected Chief Executive Officer of the Company in October
1993; he was not employed by the Company prior to that time.
(4) Mr. Parente resigned as Chief Executive Officer in October
1993 and left the employ of the Company as of December 31, 1993.
(See Compensation Committee Report.)
(5) Messrs. Andrew and William Sordoni resigned in October 1993
as executive officers of the Company.
(6) Mr. Bogdan resigned in January 1994 as an executive officer
of the Company.
*As of February 27, 1994 Michael J. Mahoney was appointed
Aggregate Option/SAR Exercises in Last Fiscal Year and
Year-End Option/SAR Values.
The following table shows information with respect to the
executive officers identified below concerning the exercise of
options and stock appreciation rights ("SAR's") during 1993.
<PAGE>
<TABLE>
Aggregate Option/SAR Exercises in Last Fiscal Year and Year End
Option/SAR Values
<CAPTION>
Number
of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares At
FY-End At FY-End
Acquired on
Exercisab1e/ Exercisable/
Name Exercise Value Realized
Unexercisable Unexercisable <S> <C>
<C> <C> <C>
David C. McCourt 0 0 0 0 Charles E. Parente 0 0 0 0
Andrew J. Sordoni, III 5,000 $140,950 0 0
William B. Sordoni 5,000 $140,950 0 0
John C. Balan 0 0 0 0
James E. Bogdan 0 0 0 0
Michael J. Mahoney 0 0 0 0
Paul W. Mazza 2,500 $70,475 0 0
</TABLE>
<PAGE>
Long-Term Incentive Plan - Awards In Last Fiscal Year
The following table provides information concerning cash
bonuses paid to the executive officers identified below pursuant
to the Company's Long Term Incentive Plan ("LTIP"). The LTIP
expired at the end of fiscal 1993, and accordingly, no cash
bonuses may be paid in the future pursuant to such plan.
<PAGE>
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
<CAPTION>
Performance
(a)Estimated Future Payouts Under
Number of or Other Period Non-Stock
Price-Based Plans Shares, Units
Unit Maturation
or Other Rights or Payout
"Threshold" "Target" "Maximum"
<S> <C> <C>
<C> <C> <C>
David C. McCourt 0 N/A 0 0 0
Charles E. Parente $1,047,868 N/A 0 0 0
Andrew J. Sordoni, III 748,184 N/A 0 0 0
William B. Sordoni 380,711 N/A 0 0 0
John C. Balan 202,768 N/A 0 0 0
James E. Bogdan 242,731 N/A 0 0 0
Michael J. Mahoney 293,902 N/A 0 0 0
Paul W. Mazza 248,214 N/A 0 0 0
</TABLE>
<PAGE>
_________________________
(a) The awards paid under the LTIP are premised upon the
Company's consolidated operating results of C-TEC's business
segments. The specific long term payments to the executive
officers are determined by a formula which relates certain
measures of actual operating results to certain objectives for
C-TEC's consolidated operating results for the years 1989
through 1993. The determination of the payout in 1993 was based
upon the total award earned during the term of the plan less
awards paid in prior years. The determination of the awards
paid in prior years were based upon the ratio of the time period
elapsed since inception of the plan to the total time period
until final maturation. This ratio is then applied to the award
earned to date under the plan's formula for award determination.
The Compensation Committee has the option to modify the LTIP
formula for award determination to adjust for certain events
and/or changed circumstances. The LTIP expired at the end of
fiscal 1993.
Performance Graph
The following performance graph compares the performance of the
Company's Common Stock and Class B Stock to the NASDAQ market
index and to a peer group index (composed of Associated
Communications, Lincoln Telecommunications, Inc., and TCA Cable
Television, Inc.) for the Company's last five fiscal years. The
non-Company related indices were supplied by Media General
Financial Services. The graph assumes that the value of the
investment in the Company's Common Stock, Class B Stock and each
index was $100 at December 31, 1988 and that all dividends were
reinvested.
Performance graph appearing here in printed copy is filed under
Form SE.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Eugene Roth served on the Company's Compensation Committee in
1993 acting as Chairman thru December 16, 1993. He is a partner
in Rosenn, Jenkins and Greenwald, which serves as local counsel
to the Company.
David C. Mitchell serves as a Director and on the Company's
Compensation Committee. He also renders consulting services to
the Company.
Charles E. Parente, the former Chief Executive Officer of the
Company, served on the Compensation Committee from April 22,
1993 to October 29, 1993. Andrew J. Sordoni, III, William B.
Sordoni and Charles E. Parente, former directors and executive
officers of the Company, serve as directors and executive
officers of Senate Construction ("Senate"), Enterprise Telcom
Services, Inc. ("Telcom"), Sordoni Enterprises, Inc.
("Enterprises"), Sordoni Construction Service, Inc.
("Construction") and Whiteman Tower, Inc. ("Whiteman"). In
1993, the Company paid an aggregate of $2,197,463 to
Construction, Senate, Telcom and Whiteman, for the purchase of
certain equipment, supplies and services and for building
construction and repair. Mr. Parente and his spouse own a fifty
percent (50%) interest in Frank M. Henry Associates which leases
office space to the Company. In 1993, the Company paid $231,302
to Frank M. Henry Associates pursuant to this lease. See
"Transactions with Management and Certain Concerns."
PKS and/or its affiliates have a substantial stock ownership in
MFSCC, CECI, RCN and the Company. Many of the companies share
mutual director
representation on their respective boards. Although members of
the current Compensation Committee do not serve on any
Kiewit-related compensation committees, Robert E. Julian is a
Director at PKS, MFSCC, KDG and RCN. James Q. Crowe, a member
of the Company's executive committee and Chairman of the Board
of MFSCC, is on the compensation committee of CECI. Richard R.
Jaros, also a member of the Company's executive committee, is
Chairman of the Board of CECI and serves on the compensation
committee of MFSCC. Messrs. Crowe and
McCourt served on the compensation committee of MFSCC until
November 1993.
EMPLOYMENT AGREEMENTS
Andrew J. Sordoni, III, and William B. Sordoni (the "Sordonis")
and Charles E. Parente were employed pursuant to employment
agreements that provided for annual base salaries in fiscal 1993
of $442,000, $225,000 and $625,000, respectively. The Sordonis
and Mr. Parente left employment of the Company in October 1993
and December 1993, respectively. See "Executive Compensation."
PENSION BENEFITS
The following table shows the estimated annual benefits payable
upon retirement for the named executive officers in the
compensation and years of service classifications indicated
under the Company's pension plan.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE2
COMPENSATION1 15 20 25 30 35
<S> <C> <C> <C> <C>
<C>
$125,000 $23,153 $30,870 $38,588 $46,305 $ 54,023
150,000 28,215 37,620 47,025 56,430 65,835
175,000 33,278 44,370 55,463 66,555 77,648
200,000 38,340 51,120 63,900 76,680 89,460
225,000 43,403 57,870 72,338 86,805 101,273
250,000 48,465 64,620 80,775 96,930 113,085
</TABLE>
____________________
1. Mr. Parente elected to receive a life benefit payment
beginning in January, 1994 in lieu of the annual supplemental
pension benefit that he would have been entitled to at age 65.
2. Messrs. McCourt, Parente, Andrew J. Sordoni, III, William
B. Sordoni, Balan, Bogdan, Mahoney and Mazza, respectively, have
0, 6, 14, 10, 4, 5, 2 and 22 years of credited service under the
pension plan.
Pensions are computed on a straight life annuity basis and are
not reduced for social security or other offset amounts.
Participants receive a pension based upon average compensation
multiplied by the number of years of service. Average
compensation is computed on the basis of the average of the
employees highest five (5) consecutive annual base salaries in
the ten (10) years immediately preceding retirement. The
compensation covered by this plan is generally based (except for
Messrs. Parente, Andrew J. Sordoni, III and William B. Sordoni,
respectively, whose covered compensation in fiscal 1993 for the
purposes of the pension plan was $235,840, $235,840 and
$225,000) upon the compensation disclosed as salary in the
"Summary Compensation Table."
TRANSACTIONS WITH MANAGEMENT AND CERTAIN CONCERNS
In 1993, the Company paid an aggregate of $2,197,463 to
Enterprise Telcom Services, Inc., Sordoni Construction Services,
Inc., Senate Construction and Whiteman Tower Inc., entities
directly owned and controlled by Andrew J. Sordoni, III, William
B. Sordoni, Stephen Sordoni and Charles E. Parente, for the
purchase of certain equipment, supplies and services, and for
building construction and repair. Andrew J. Sordoni, III,
William B. Sordoni and Charles E. Parente are former directors
and executive officers of the Company.
Frank M. Henry, a Director of the Company, is a principal in
Martz Travel and Frank Martz Coach Company which performs travel
services for the Company. In 1993, the Company paid $177,693 to
Martz Travel and Frank Martz Coach Company for such services.
<PAGE>
Frank M. Henry and Charles E. Parente, together with his
spouse, each owns a 50% partnership interest in Frank M. Henry
Associates, which leases office space to the Company under an
amended lease which expires May 31, 1996.
A total of $231,302 was paid by the Company to Frank M. Henry
Associates for rent, utility, parking and maintenance services
for the year ending December 31, 1993.
Eugene Roth, a Director of the Company, is a partner in Rosenn,
Jenkins and Greenwald which serves as local counsel for the
Company.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors of the Company held seven (7) meetings
in 1993. The Board of Directors has standing Executive, Audit,
Compensation and Pension Committees.
The Executive Committee of the Company held one (1) meeting in
1993. The Committee approved the Proxy Statement and Notice of
Annual Meeting of Shareholders, and authorized Company
investments. This Committee also presents names of prospective
candidates to serve on the Board of Directors. The current
Executive Committee consists of David C. McCourt, Chairman,
James Q. Crowe, Richard R. Jaros and Walter Scott, Jr.
The Audit Committee of the Company held two (2) meetings in
1993. The Committee (i) discussed matters concerning the audit
of the annual financial statements, (ii) considered the
Company's internal audit program, (iii) recommended the
selection of the independent auditors to audit the accounts of
the Company, and (vi) discussed other matters of concern to the
Audit
Committee, the auditors or management. The current Audit
Committee consists of Robert E. Julian, Chairman, David C.
Mitchell and Donald G. Reinhard.
The Compensation Committee of the Company held two (2) meetings
in 1993. The Committee made recommendations to the Board of
Directors concerning the salaries and incentive compensation
awards for the top levels of management of the Company and its
subsidiaries and established compensation policy. The
Compensation Committee also administered the Company's,
Short-Term Incentive Plan, Long-Term Incentive Plan, and 1984
Stock Option and Stock Appreciation Rights Plans. The current
Compensation Committee consists of David C. Mitchell, Chairman,
Robert E. Julian, Stuart E. Graham and Eugene Roth.
The Pension Committee of the Company held three (3) meetings in
1993. The Committee reviewed and evaluated the investment
performance of the various pension investment funds and
monitored the performance of the administrators, investment
managers and trustees of such funds, as well as reviewed the
actuarial assumptions used in setting the Company's funding
policies for such funds. The current Pension Committee consist
of Richard R. Jaros, Chairman, David C. McCourt, Thomas C.
Stortz, Michael J. Mahoney and John J. Menapace.
<PAGE>
Non-employee Directors of the Company receive a retainer of
$10,800 per year and are paid $500 for each board meeting
attended. Committee Chairman and other committee members are
paid $500 and $300, respectively, for each committee meeting
attended. In fiscal 1993, Stuart E. Graham, Frank M. Henry,
David C. Mitchell, Donald G. Reinhard and Eugene Roth were paid
$15,300, $14,400, $1,450, $15,500 and $15,400, respectively, for
the foregoing
services. Compensation for director services rendered by
Directors not employed as executive officers of the Company but
employed as executive officers at PKS and MFSCC were paid
$8,0001 and $2,3002, respectively in fiscal 1993.
David C. Mitchell, a director of the Company, serves as a
consultant to the Company.
____________________
1. Messrs. Jaros, Julian, Scott, and Stortz.
2. J. Crowe.
OTHER MATTERS
The Board of Directors does not know of any other matters that
may come before the meeting. However, if any other matters
properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the
proxy in accordance with their judgment on such matters.
GENERAL INFORMATION
FINANCIAL INFORMATION
A copy of the Company's 1993 Annual Report to Shareholders
containing the Consolidated Financial Statements of the Company,
including the report thereon dated March 4, 1994 of Coopers &
Lybrand, independent accountants, accompanies this Proxy
Statement.
Upon the written request of any person who on March 1, 1994 was
a record owner of the Company's stock, or who represents in good
faith that he was on such date a beneficial owner of such stock
entitled to vote at the annual meeting, the Company will furnish
without charge upon the written request of a Shareholder a copy
of the company's annual report on form 10-K, including the
financial statements, schedules, and exhibits, filed with the
Securities and Exchange commission. Written requests for the
report should be directed to:
<PAGE>
Thelma J. Marshall
Assistant Secretary
C-TEC Corporation
46 Public Square, P.O. Box 3000
Wilkes-Barre, PA 18703-3000
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. In
addition to the use of the mail, proxies may be solicited by
officers, directors and regular employees of the Company,
personally or by telephone, telecopy or telegraph, and the
Company may reimburse persons holding stock in their names
or those of their nominees for their expenses in forwarding
soliciting materials to their principals.
It is important that proxies be returned promptly. Therefore,
shareholders are urged to promptly fill in, date, sign and
return the enclosed proxy in the enclosed envelope, to which no
postage need be affixed if mailed in the United States.
SHAREHOLDERS' PROPOSALS
Any shareholder who desires to submit a proposal to be
considered for inclusion in the proxy statement and proxy of the
Company relating to the 1995 Annual Meeting of Shareholders must
submit such proposal in writing to the Company by November 15,
1994. Such proposals should be hand delivered or mailed, return
receipt requested, to the Secretary of the Company.
By order of the Board
of Directors.
\s\ Raymond B.
Ostroski
Raymond B. Ostroski,
Vice President,
General Counsel and Corporate Secretary
Dated: March 15, 1994
<PAGE>
C-TEC CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders on April 21, 1994
The undersigned, hereby revoking any contrary proxy previously
given, hereby appoints James Q. Crowe, Richard R. Jaros, and
David C. McCourt, each of them, his true and lawful agents and
proxies, with full power of substitution and revocation, to vote
as indicated below, all the Common Stock and Class B Common
Stock of the undersigned in C-TEC CORPORATION, (the "Company")
entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at The Westmoreland Club, 59 South Franklin
Street, Wilkes-Barre, PA, on April 21, 1994, at 10:00 a.m. local
time, and at any adjournment or postponement thereof, all as set
forth in the related notice of proxy statement for the 1994
Annual Meeting.
1. Election of four Directors to Class I for three year terms.
FOR the nominees listed below
WITHHOLD AUTHORITY
except as marked to the contrary
as to all four nominees
DAVID C. McCOURT, DAVID C. MITCHELL, DONALD G. REINHARD, WALTER
SCOTT, JR.
The Board of Directors recommends a vote FOR
INSTRUCTION: To Withhold Authority For An Individual Nominee,
Strike A Line Through Such Nominee's Name.
(Continued, And to be Signed and Dated, on Other Side)
<PAGE>
This proxy when properly executed will be voted in the manner
directed herein. If no direction is made, this proxy will be
voted FOR the proposals listed below.
2. Proposal to ratify the appointment of Coopers & Lybrand as
FOR AGAINST ABSTAIN
independent auditors for fiscal year 1994.
3. Proposal to approve the company's 1994 stock option plan.
FOR AGAINST ABSTAIN
4. In their discretion upon such other business as may properly
come before the meeting.
The undersigned acknowledges receipt of the notice and
proxy statement relating to the 1994 Annual Meeting and the
Company's annual report for 1993.
No. of
Date:_________
Shares: _________
__________________________________________(L.S.)
Signature(s)
of Shareholder(s)
_________________________________________(L.S.)
Signature(s) of Shareholder(s)
Please sign
exactly as name appears hereon. Joint
owners should each sign. When
signed as attorney,
executor, administrator, trustee or guardian, give
full
title as
such.
PLEASE
MARK, SIGN AND DATE THIS PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED
ENVELOPE.
